The Evolution and Future of Pension Accounting

Accounting for defined benefit plans is one o f the most complex and cumbersome components o f financial reporting for companies in the United States. The purpose o f this paper is to examine how and, more importantly, why current accounting standards became what they are today, and how these accounting standards are potentially going to change in the near future. To do this, all o f the significant accounting standards related to defined benefit plans passed in the United States since 1948 are broken down to understand not just the technical requirements of the rules, but also the motivation and logic behind them. After all current US standards are explored, international standards are briefly discussed in conjunction with the global accounting convergence project. This leads to the statistical analysis which compares the current defined benefit obligation recognized by 30 large US corporations to a computed benefit obligation that would be recorded under international financial reporting standards. The results of the analysis show that if US companies switch from US GAAP to IFRS, they will likely recognize a smaller pension liability or possibly even a pension asset.B.A. (Bachelor of Arts